By Ben Rubin, CTO, Zeo

Earlier this year, I spoke at MobiHealthNews' Everywhere Healthcare event at CTIA. One discussion at the event, called "Wireless Operators Eye Healthcare” was fascinating – and I asked an interesting question of the carriers, which I re-state below:

Many devices in my life want to be connected. There are easily 10x and maybe 100x additional connection to be made. The ‘wireless hub’ model where local radios communicate with a hub (or mobile phone as a hub) is currently a customer experience nightmare and standards/ubiquity is a major problem. Are you planning to develop technology and pricing structures that can allow these 10-100x devices that need only a few K a day or month to connect directly and magically to the cell network? I have previously asked this question of technology enablers in the cell space – and was told to ‘not hold my breath’.

When asked, the responses from the mobile carriers were fascinating. They all realized the magnitude of the opportunity and the importance of the question. But they (ATT, Vodafone, Verizon, Jitterbug) were visibly at a loss for how to solve the problem and capture the opportunity. They admitted that their current business model with phone that cost $100-600 and plans that cost $40-100/month was limiting them. Steve from Verizon was hopeful that new usability and technology in the local radio space would allow for an easy connection to a home/mobile gateway to be made.

Here is my take. Tons of devices want and need to be connected. There are major consumer, device manufacturer, and carrier advantages for working out the business model to make this happen. A neat example was mentioned by Don Jones of Qualcomm during a keynote at the Burrill Consumer Digital Health Meeting earlier this week – a Gillette razor that was connected could have a re-order button for blades. Press the button and a few days later a truck drops a package off with your new purchase. Easy and convenient for the consumer, skips the middle-man for the manufacturer, and more bits move and get charged for the carrier. There are two ways to connect a device like a razor (or an alarm clock, washer, picture frame, mirror, etc.) – local radio to a gateway or direct cellular connection. I’ll discuss each and where I see things headed below.

Local radio to a gateway: Great business model, challenging customer experience

If a device has a small battery, is small size, and needs long-life going directly up to the cell network is not usually possible. The way to get this sort of device connected is usually a gateway of some sort. But what a customer nightmare. Bluetooth, Ant+, proprietary radios, WiFi, BLE, ZigBee – all with different ranges, trouble pairing, wireless gateways that need to remain connected and configured, etc. etc. It’s currently a customer nightmare – and its unlikely that any large group of companies with standards etc will be able to fix the nightmare. The only way I see this working well is if a design and user-experience centered company takes charge and really owns the wireless gateway market. Hard to do – and even if it does happen it will take forever. What a mess. But once set up – it should be quite economical – with cheap radios in devices and many devices sharing a connection. The same set of customer experience problems exist with the smartphone-as-a-gateway model.

Cell directly to the cloud: Challenging business model, great customer experience

Anything that can hold a reasonable size electronics and battery, or is plugged in, or has a charger that is plugged in (local RF to charger, charger goes cell to cloud) can use the cell network directly. The latest numbers (in volume) are about $20 for a bare-bones GPRS module and about $2/mo for a smidgen of data. But the customer experience is magic. Just plug it in, and its connected. I am very bullish that chip/module providers, carriers, and companies can manage to overcome the business challenges here. I believe this will be easier than managing the customer experience nightmares with a local radio/gateway solution. Examples could include razor/blade models like described above, cheaper module cost (under $10) and data rates (bundle a bunch of data across a bunch of devices – build into retail price) will be key, adding an incremental subscription charge onto an existing utility for connectivity, and others are all options.

There are 5 billion cell phone users – out of 6.6 billion people (both approx) – this is a saturated market. In the western world people have tons of devices that remain unconnected – a huge opportunity for chip/module providers and carriers. If the companies currently leading the charge in M2M connectivity don’t create a solution someone else will buy some spectrum and do so. And for all the little guys like Zeo – the sooner the better!

Ben regularly blogs about sleep, health, entrepreneurship and more over at BSRubin.com